Employees Assured On Doc Stock Deal

A TOP OFFICER of Doctors Officenters Corp. (DOC) has promised a group of employees that any losses they suffer on their DOC stock when the company is sold will be made up, The Tribune has learned.

The Mt. Prospect-based chain of 29 free-standing minor emergency centers recently announced an agreement in principle to sell the company to Humana Inc. for $17 million in cash or Humana stock, or about $3 a share. A year ago, DOC went public for $9 a share.

The pending sale has brought forth allegations that DOC insiders are benefiting unfairly. Those who bought DOC stock before the public offering in December, 1983, including several officers and directors, paid an average of 54 cents a share for about 4.7 million of the 5.65 million shares outstanding. The sale would give them a profit of about $11.6 million.

The promise to ``make whole`` some employees who will lose money on company stock could raise new questions about the fiduciary responsibility of DOC`s managers and directors.

``IF THEY`RE going to give (extra money) to their employees to bolster their morale, they ought to give it to the public investors as well, because their morale is just as low,`` said Edward Slovick, an attorney for a group of shareholders who bought DOC stock at the $9 public offering price and have sued in federal court to recover their investment.

The pledge to employees was made by Sherry Dolce, a director who is executive vice president and secretary of DOC, at a Nov. 21 meeting called to tell office managers about the agreement to sell DOC, according to sources at the meeting. The deal was publicly announced later that same day.

When an office manager asked about those in the group who bought DOC shares at the $9 initial price, ``Dolce said she wasn`t sure how they were going to do it, but we were going to be made up for the difference,`` said one person who attended the meeting, but who asked for anonymity. Two DOC senior vice presidents and directors, Doctors Lawrence B. Levy and Ronald L. van der Horst, also were there, sources said.

A spokesman for DOC, who asked not to identified, confirmed the story.

``THE EMPLOYEES were promised that their losses would be made up if it was legally possible to do so,`` the spokesman said. ``These people (the office managers) were not sophisticated investors but people who were excited about the prospects of the company they worked for.`` He said the payment would come from the Flashner Medical Partnership, which runs the offices and pays an administrative fee to DOC.

Although DOC and the Flashner Medical Partnership are legally separate entities, their officers and directors overlap. Flashner Medical Partnrship also owns a controlling share of DOC and stands to make a $6.4 million net profit from the Humana sale. Flashner Medical Partnrship, in turn, is controlled by Dr. Bruce A. Flashner, who heads it and DOC.

The spokesman said he didn`t know whether physician partners of Flashner Medical Partnrship and other employees who lost money would be made whole. Flashner privately assured some money managers shortly before the company went public that Flashner Medical Partnrship`s physician partners would probably support the company`s stock price by buying more shares if the price declined because of their confidence in DOC.

The class action shareholders` suit filed by Slovick charges Flashner Medical Partnrship, DOC and its directors with making misleading statements in the company`s prospectus and asks that those who bought the stock be given back their $9 a share.

IN ADDITION, an outside director who resigned from the DOC board Dec. 3 charged that inside shareholders would ``profit at the public`s expense`` from the sale. Terry D. Diamond, a partner in Steiner, Diamond & Co., the Chicago investment banking firm that managed DOC`s initial public offering, asked for ``a preferential sharing of the Humana sales proceeds for the public shareholders.``

In response, Flashner ruled out any preferential sharing, noting in a Dec. 14 letter that ``we, as directors, have a fiduciary duty to all shareholders and not to any one particular group.`` He added that the firm had no choice but to sell to Humana because of a shortage of working capital.

Under the tentative agreement with Humana, Flashner Medical Partnership will continue to provide medical services at the offices, although DOC would go out of business. DOC lost $3.9 million on revenues of $8.9 million in the year ending July 31.